HomeMy WebLinkAboutCouncil Presentation 02-19-2019 CFD Policy ChangesCOMMUNITY FACILITIES DISTRICT (CFD) POLICY CHANGESREGULAR MEETINGFebruary 19, 20191
DISCUSSION ITEMS• Brief recap of prior study sessions and direction previously provided• Optional policy amendments for Council consideration• Next steps2
BRIEF RECAP OF PREVIOUS STUDY SESSIONS• Described a CFD• Reasons why a CFD might be created• Discussed the importance of a sound CFD policy• Covered required and optional policy changes3
GENERAL THEMES FROM COUNCIL FEEDBACK4• Importance of homeowner education and acknowledgement when moving into a CFD• CFD’s with extraordinary infrastructure requirements vs routine infrastructure• Conservative approach served us well during economic cycles• Avoid disproportionally burdening homeowners with CFD obligations• Homeowners may accept a slightly higher obligation if they see the value in parks and other infrastructure
OPTIONAL POLICY AMENDMENTS – DRAFT LANGUAGEEducation, disclosure and record keeping• A disclosure form which will be used to explain the existence of the CFD• NEW - Record-keeping processes for retaining all signed homeowner CFDacknowledgement disclosure statements. Evidence of singed forms shall befiled with the Town• NEW – Increased information about CFD’s included in promotional materials5
OPTIONAL POLICY AMENDMENTS – DRAFT LANGUAGEDeveloper’s equity in project• A description of the proposed equity contribution (enhanced infrastructure) from theapplicant/landowner and a calendar showing the timing of such equity contribution.6
OPTIONAL POLICY AMENDMENTS – DRAFT LANGUAGEImpact of debt obligations• An analysis which addresses the impact of projected property taxes and property taxrates, special assessments, fees, charges and any other costs that would be borne byproperty owners in the CFD• Discussion whether costs will impact the marketability of the development• Comparison of proposed tax rates or charges within the proposed CFD contrastedwith the tax rates and changes in adjoining and similar areas outside of theproposedCFD7
OPTIONAL POLICY AMENDMENTS – DRAFT LANGUAGEGeneral Obligation (GO) target tax rate and protections• Applicant will be required to enter into a standby agreement where they will contributean amount annually sufficient to pay the difference between the revenues producedby the target tax rate and the actual CFD debt service coming due in that fiscal year• The security shall remain in full force and effect until such time as the CFD board ofdirectors, exercising their sole discretion, determines the assessed value of realproperty in the CFD is sufficient to generate ad valorem taxes at the pre-establishedCFD tax rate sufficient to pay the actual CFD debt service8
OPTIONAL POLICY AMENDMENTSPossible policy statement -We want parity between all CFD’s for routine infrastructure. However, in circumstancesin which CFD’s have extraordinary infrastructure requirements, we wouldallow theextraordinary portion of the obligation to be higher than a CFD with only routineinfrastructure.– The increased obligation from extraordinary infrastructure could be intheformof:• GO target tax rate; and• SA on a per lot basis9
POSSIBLE RATE AND ASSESSMENT STRUCTURETypeRoutine Infrastructure Only(Tier 1)Both Routine and ExtraordinaryInfrastructure (Tier 2)GOSA10• Routine Infrastructure– GO emphasis for routine infrastructure requirements– Provides parity between all CFD’s• Extraordinary or “Special” Infrastructure Requirements –– Minimum GO target tax rate the same as for CFD’s with only routine infrastructure– SA’s issued offset some portion of the “special” infrastructure requirements
IMPACT OF PROPOSITION 117•Previous- home values placed on tax roll at 80% of estimated fair value•Prop 117 -actual limited values placed on tax role appear to range from 60-80% of estimated fair value– Homes in Marana are averaging close to 70%11Previous Prop 117L 1 Estimated Fair Value 260,000$ 260,000$ L 2 LAV/$100 208$ 182$ AnnualCurrent Possible DifferenceL 3 Tax Rate/$100 (debt only) 2.50$ 2.85$ 0.35$ L 4 Annual GO Payments 520 519 64 L 5 Effective Tax Rate 2.50$ 2.85$ 0.35$ L 6 Estimated Annual Payments 520$ 519$ (1)$ L 7 Estimated Monthly Amount 43$ 43$ -$ L 8 Estimated Daily Amount 1.43$ 1.43$ -$
COMPARISON OF ROUTINE AND SPECIAL INFRASTRUCTURE• Illustrative example– GO’s issued for routine infrastructure• Same target tax rate (parity)• Protections placed to maintain target• There is no legal maximum rate– SA’s issued for “special” infrastructure• Lesser of:• ─ Fixed amount per lot or• ─ Value to Lien• Obligation may be passed to ultimate home owner12L 1 Estimated Fair Value 260,000$ L 2 LAV/$100 182$ AnnualRoutine "Special" DifferenceL 3 Tax Rate/$100 (debt only) 2.85$ 2.85$ -$ L 4 Annual GO Payments 519 519 -$ L 5 Special Assessment per Lot -$ 6,000$ 6,000$ L 6 Annual SA Payments -$ 450$ 450$ L 7 Effective Tax Rate 2.85$ 5.32$ 2.47$ L 8 Estimated Annual Payments 519$ 969$ 450$ L 9 Estimated Monthly Amount 43$ 81$ 38$ L 10 Estimated Daily Amount 1.43$ 2.70$ 1.27$
DIRECTION REGARDING POLICY CHANGESCurrent Common Ranges Ideas for discussionGO Target Tax Rate for Debt Service – Special Circumstances$2.50 per $100 of valuationPer $100 of valuation: $2.00 to $3.50Tier 1 - $2.85/$100Tier 2 - $2.85/$100SpecialAssessment Bonds• No cap other than Value to Lien (see below)• Obligation cannot pass to ultimate home owner$2,000 to $3,500 per lot for routine infrastructure;Passes to home ownerLesser of:─ $6,000 per lot for extraordinary or─ Value to Lien (see below)Obligation may be passed to ultimate home ownerValue to Lien Ratio (Special Assessment Bonds)• 6:1 Public• 4:1 Private Placement• Excludes value of improvements4:1 Public3:1 Private PlacementIncludes value of improvements• 4:1 Public• 3:1 Private Placement• Includes value of constructed improvementsGO Authorization7 yearsThe earlier of 15 years or 75% of development13
NEXT STEPS• Council direction and changes will be incorporated into an amended CFD policy• Staff will bring amended CFD policy to Council at a future meeting14
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